Is Ignorance Bliss?

I visited a sick friend at New York Presbyterian Hospital the dayafter industry titan Maurice Greenberg announced he would surrenderhis second position in two weeks at American International Group,retiring as non-executive chairman after already resigning asCEO.

To my chagrin, while approaching the elevators leading to myfriends room, I was confronted with a gigantic portrait of Mr.Greenberg and his spouse, and realized I was about to enter theGreenberg Pavilion. No telling how many millions were contributedto earn the naming rights on the very impressive hospitalwing.

When I excitedly shared this bit of insurance trivia with myfriend, he had no idea who Maurice Greenberg was (although herecognized "Hank" Greenberg as a Hall of Fame baseball player). Mydear pal is a very intelligent, well-read individual who keeps upwith the news, but the person who had helped build the hospitalroom he was occupying was a total mystery to him.

Despite the fact that insurance scandals in generaland thosesurrounding AIG and Mr. Greenberg in particularhave frequented theheadlines lately, this lack of name recognition was nosurprise.

Insurance is by nature a low-profile business. Maurice Greenberg isa giant in this industryas well as an active philanthropistbut heis no Bill Gates, Lee Iacocca or Donald Trump in terms of celebritystatus. Outside of his own industry, the Wall Street community, andthose who donate and raise money to build hospital wings, he is astranger to most.

Indeed, the entire "scandal" in the industry involving bid-rigging,incentive fee abuse and misuse of finite reinsurance could betaking place in Kyrgyzstan as far as the general public isconcerned.

It was a different story when New York Attorney General EliotSpitzer revealed wrongdoing in the mutual fund industry. Theaverage person could relate. I heard complaints on the subway aspeople scanned the headlines: "Hey, thats my 401K those clowns werefooling around with!"

The same could be said about Mr. Spitzers probe into supposedlyobjective analysts who skewed their opinions to help land or keepbusiness for the investment banks employing them: "Hey, I boughtthat piece of garbage stock after my broker showed me that riggedresearch report!"

Insurance is another story. People just dont get how this industryworksand basically, they dont care. Their only concern is buyingcoverage as cheaply as possible and getting claims paid. Besides,most people already "know" insurance is stacked against them. Thatswhy you hardly ever see positive images of anyone from the industryin the popular media.

For instance, in the recent animated film "The Incredibles," I amtold the main superhero is reduced to working as a claims adjuster.Unable to suppress his instincts to do good, he helps little oldladies get claims paid against the wishes of his penny-pinchinginsurance company boss. Thats typical. An adjuster, agent orinsurer is never pictured as a superheronot even when they go toincredible lengths to reimburse people quickly after naturaldisasters strike.

Insurance is just not high on the radar screen, or in the esteem,of the average Joe or Jane. This makes me wonder whether the damageto the industrys reputation stemming from the misbehavior exposedby Mr. Spitzer and other government agents will be long lasting,quickly forgotten or even acknowledged by the general public in thefirst place.

For the industrys sake, ignorance may indeed be bliss.

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Sam Friedman

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Editor-In-Chief




Reproduced from National Underwriter Edition, April 1, 2005.Copyright 2005 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.




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